#### The Western Reserve Academy, Appellant, *v.*Board of Tax Appeals et al., Appellees.

(No. 31803

Decided March 1, 1950.)

*134
      *Mr. Perry L. Graham, Mr. Harold T. Clark*and *Mr. E. D. Williams,*for appellant.

*Mr. Herbert 8. Huffy,*attorney general, *Mr. W. H. Annat*and *Mr. Donald B. Leach,*for appellee Board of Tax Appeals.

By the Court.

Was the decision of the Board of Tax Appeals unreasonable or unlawful?

Section 2, Article XII of the Ohio Constitution, provides, in part, as follows:

> “Land and improvements thereon shall be taxed by uniform rule according to value * * ***and without limiting the general power, subject to the provisions of Article I of this Constitution, to determine the subjects and methods of taxation or exemptions therefrom, genera] laws may be passed to exempt * * * public school houses, * * * institutions used exclusively for charitable purposes * *

In considering the applicability of this section of the *135Constitution to the above-mentioned Sections 5349 and 5353, General Code, the following language in the case of *Ursuline Academy of Cleveland*v. *Board of Tax Appeals,*141 Ohio St., 563, 49 N. E. (2d), 674, states the rule as follows in paragraph two of the syllabus:

> “Under Section 5349 or Section 5353, General Code, property belonging to a public college, academy or in-institution of learning not publicly owned may be exempted from taxation only if used exclusively for a charitable purpose at the time the exemption is sought. ’ ’

The same rule has been restated in the case of *Amerian Committee of Rabbincal College of Telshe, Inc.,*v. *Board of Tax Appeals,*148 Ohio St., 654, 76 N. E. (2d), 719, as follows:

> “Property to be exempt from taxation as a public college or academy or as land connected with a public institution of learning must be, at the time exemption is sought, owned and operated for such purpose, without any view to profit, by the state or a political subdivision thereof, or, if privately owned, must be used exclusively for the benefit of the public as a public charity, without any view to profit.”

The facts upon which the order denying exemption was based are not set forth in the entry. However the board considered as established by the evidence that the applicant is a charitable institution within the meaning of Section 5353, General Code, and found that by reason of the educational policy of the academy it was convenient and necessary that these properties *“be let to these instructors as residence for them and their families’’*and also that the instructors are required to accommodate academy guests and to entertain student groups for instruction and entertainment when needed and to tutor, brief or otherwise deal with individual students therein.

Although it is urged by counsel for appellant, with *136some apparent acquiescence by the Board of Tax Appeals in its entry, that no rent is indirectly paid in that the occupancy of a residence by a member of the faculty is not regarded as a portion of his compensation, it seems rather obvious that their salaries would quite logically be greater if such members of the faculty were required to provide residences for themselves and their families.

Applying the case of *Watterson*v. *Halliday, Aud.,*77 Ohio St., 150, 82 N. E., 962, which held that, “parish houses, otherwise known as the residences of the priests and bishops of the Roman Catholic church, are not exempt from taxation and legal assessments, by virtue of Section 2 of Article 12 of the Constitution of Ohio, nor by the provisions of Section 2732, Revised Statutes [predecessor to Sections 5349 and 5353, General Code], although such places of residence are used by the priests and bishops for the discharge of many duties of a religious and charitable nature, which are imposed by the vows of their ordination and rules of the church,” the Board of Tax Appeals held that the eight residence properties occupied by the instructors are not used for charitable purposes. In arriving at that conclusion, the board held that occupancy by the masters and their families is the primary use of the properties and any such úse as is made by the student body singly or collectively, or by institution guests, is purely secondary and incidental. See *In re Bond Hill-Roselawn Hebrew School,*151 Ohio St., 70, 84 N. E. (2d), 270.

There was evidence on which the Board of Tax Appeals could properly arrive at this conclusion. Residence in a dwelling with a family must necessarily be a private use of the premises. Where the exercise of such private rights constitutes the primary use of property owned by a charitable institution such property is no longer used exclusively for a charitable purpose. See *President and Trustees of The Miami University v. Evatt, Tax Commr.,*144 Ohio St., 434, 59 N. E. (2d), *137366; *Society of Precious Blood*v. *Board of Tax Appeals,*149 Ohio St., 62, 77 N. E. (2d), 459; *Mussio*v. *Glander, Tax Commr.,*149 Ohio St., 423, 79 N. E. (2d), 233, and *Cleveland Branch of Guild of St. Barnabas for Nurses*v. *Board of Tax Appeals,*150 Ohio St., 484, 83 N. E. (2d), 229.

Decision of the Board of Tax Appeals is affirmed.

*Decision affirmed.*

Weygandt, C. J., Matthias, Hart, Zimmerman and Turner, JJ., concur.

Stewart and Taet, JJ., dissent.

Stewart, J.,

dissents upon the reasoning of the Circuit Court in *Kenyon College*v. *Schnebly, Treas.,*12 C. C. (N. S.), 1, 21 C. D., 150, affirmed by this court in *Schnebly, Treas.,*v. *Kenyon College,*81 Ohio St., 514, 91 N. E., 1126, and upon the reasoning of this court in *Aultman Hospital Assn. v. Evatt, Tax Commr.,*140 Ohio St., 114, 42 N. E. (2d), 646, and *In re Bond Hill-Roselawn Hebrew School,*151 Ohio St., 70, 84 N. E. (2d), 270.

Taft, J.,

dissenting. The last sentence of Section 5353, General Code, as enacted effective September 27, 1945, reads:

> “Real and tangible personal property belonging to institutions used exclusively for charitable purposes, shall be exempt from taxation.”

Both the Board of Tax Appeals and the majority opinion recognize that The Western Reserve Academy is a charitable institution, within the meaning of Section 5353, General Code. Admittedly, therefore, the property for which tax exemption is sought belongs to an institution *(Gerke, Treas.,*v. *Purcell,*25 Ohio St., 229, 244, 245), which institution is “used exclusively for charitable purposes.” The statutory words do not require that the particular property be used ex*138clusively for charitable purposes. The words of the statute obviously grant the exemption sought, unless they are to be given a strained and extraordinary meaning.

Prior to the 1929 amendment of Section 2 of Article XII of the Constitution, it had been held that the words of that section required such a strained and extraordinary construction of the similar language of Section 5353, General Code, as then in force, so as to require the use of the particular property to be exclusively for charitable purposes. *Jones, Treas.,*v. *Conn et al., Trustees,*116 Ohio St., 1, 155 N. E., 791. In effect, this court held it necessary to insert by construction the word “and” after the word “institutions. ’ ’

This construction, in 1927, of Section 2 of Article XII of the Constitution, as adopted in 1912, was somewhat different from that which had been previously anticipated (see *Cleveland Bible College*v. *Board of Tax Appeals,*151 Ohio St., 258, 268, 269, 85 N. E. [2d], 284; *Myers, Treas., v. Benjamin Rose Institute,*92 Ohio St., 238, 250, 110 N. E., 929); and may well have been one factor which led to proposal and adoption of the 1929 amendment to that section of the Constitution, which was admittedly designed in part “to provide for a more flexible system of taxation for the state.” See *City of Cleveland*v. *Board of Tax Appeals, ante, 97.*

In my opinion, as a result of that amendment, the General Assembly now has general power, subject to the provisions of Article I of the Constitution, to determine exemptions from taxation. My reasons for this conclusion are stated in the dissenting opinion in *City of Cleveland*v. *Board of Tax Appeals, supra.*If the General Assembly has such power, it follows that there is no longer any necessity for a strained and extraordinary construction of the words of Section 5353, General Code. If the words of that section are given their ordinary meaning, the tax exemptions here sought should be granted.

*139However, even if such a strained and extraordinary construction is given to the words of Section 5353, General Code, the exemptions here sought should still be granted, unless previous decisions of this court are to be disregarded.

In *Aultman Hospital Assn.*v. *Evatt, Tax Commr.,*140 Ohio St., 114, 42 N. E. (2d), 646, the syllabus reads:

> “Property used exclusively as a home for student nurses, which is owned and maintained by a nonprofit hospital association as a necessary part of a hospital used exclusively for charitable purposes, is exempt from taxation.”

The record in the instant case clearly discloses that the use of the property, for which tax exemption is sought, was just as essential to the conduct of this boarding school for boys of high school age away from their homes as the use of the home for student nurses in the *Aultman case*was to the operation of the hospital.

The rule governing exemption from taxation of property of the kind involved in the instant case was established by this court over 40 years ago in the decision in *Schnebly, Treas.,*v. *Kenyon College,*81 Ohio St., 514, 91 N. E., 1138, unanimously affirming without opinion the decision of the Circuit Court in *Kenyon College*v. *Schnebly, Treas.,*12 C. C. (N. S.), 1, 21 C. D., 150. Five of the six members of this court concurred in that decision, the vote of the sixth member not being indicated.

The unanimous opinion of the Circuit Court in that case was concurred in by Donahue, J., later a member of this court. . The facts in that case did not even indicate the strong necessity, present in the instant case, for use of the premises there involved as a part of the charitable institution. This clearly appears from the court’s opinion, where it is stated on page 2:

> *140“It appears that the college has a number of residences which are occupied by the members of the faculty of the college. It has been the policy of the college to permit such of its professors as are married, and also its president, to use these residences, rent free. It further appears that they are primarily residences, and no literary exercises or instruction are conducted , therein. ’ ’

The statutory language relied upon in that case was substantially similar to the language of Section 5349, General Code, which is one of the sections relied upon by Western Reserve Academy in the instant case.

In the court’s opinion, it is said on page 5:

> “It is urged upon our attention by the defendant, that these houses, or residences are not used, ‘ *exclusively,*’ for literary purposes, and that unless used exclusively for literary purposes, or for the purpose of instruction, that they are not exempt.

> “But there are many buildings connected with colleges and academies which are necessary for the proper conduct of the business of the college, in which literary exercises do not take place, and which are not employed for the purpose of giving instruction. Many buildings are employed for the purpose of storing the necessary equipment and apparatus of the college, or for the purpose of carrying on the experiments, or for the purpose of storing the archives and records of the college, and conducting its financial affairs; yet because these, or any of these, are carried on in the buildings, or a portion thereof, it can not be said, that they are not devoted to the uses and purposes of the college.

> “* * *And we think it was the purpose to exempt all buildings that were with *reasonable certainty*used in furthering or carrying out the necessary objects and purposes of the college. * # *”

Reasoning similar to that of the Circuit Court in the *Kenyon College case*was used in reaching the decision *141of this court allowing exemption in *In re Bond Hill-Roselawn Hebrew School,*151 Ohio St., 70, 84 N. E. (2d), 270.

In the court’s opinion in the *Kenyon College case*on page 7, the case of *Watterson*v. *Halliday, Aud.,*77 Ohio St., 150, 82 N. E., 962, cited in the majority opinion, is distinguished on the ground that this court, in that case, held that the Roman Catholic church was not an institution of “purely public charity.”

In *Ursuline Academy of Cleveland*v. *Board of Tax Appeals,*141 Ohio St., 563, 49 N. E. (2d), 674, cited in the majority opinion, the court denied exemption, where property purchased for the purpose of developing an educational institution had not yet been used for that purpose. In the court’s opinion, it is said at page 569 with regard to the *Kenyon College case*that “use was made a test of the right to exemption as shown by the first branch of the syllabus and the language of the opinion,” thereby emphasizing the clear applicability of the decision made in the *Kenyon College case*as requiring exemption on the facts presented by the record in the instant case.

The majority opinion cites *President and Trustees of Miami University*v. *Evatt, Tax Commr.,*144 Ohio St., 434, 59 N. E. (2d), 366. In that case, tax exemption was denied for “a residence building” where a life estate therein had been reserved to the grantors in their deed to the university and “the record did not show the residence building and land were used for a tax exempt purpose.” The Board of Tax Appeals had determined that the life estate was taxable in the name of the owner of that estate. This court affirmed that decision. It did not appear that the holders of the life estate, held to be taxable, had any connection with the university. Such a case could obviously have no bearing on the facts involved in the instant case.

None of the other cases cited in the majority opinion is in point. The decisions in *American Committee of*
      *142
      *Rabbinical College of Telshe, Inc.,*v. *Board of Tax Appeals,*148 Ohio St., 654, 76 N. E. (2d), 719; *Society of Precious Blood*v. *Board of Tax Appeals,*149 Ohio St., 62, 77 N. E. (2d), 459, and *Mussio*v. *Glander, Tax Commr.,*149 Ohio St., 423, 79 N. E. (2d), 233, were each based on a finding that the institution involved was not open to the public. See *Cleveland Bible College*v. *Board of Tax Appeals, supra,*266 and 267. Here, admittedly, Western Reserve Academy is a public college or academy or a public institution of learning not used with a view to profit within the meaning of Section 5349, General Code. In *Cleveland Branch of the Guild of St. Barnabas of Nurses*v. *Board of Tax Appeals,*150 Ohio St., 484, 83 N. E. (2d), 229, it did not appear that the building involved was maintained as a necessary part of any institution used exclusively for charitable purposes as were the properties involved in the *Aultman case,*the *Kenyon College case,*the *Bond Hill-Roselawn Hebrew School case*and the instant case.

In my opinion, the decision of the Board of Tax Appeals, denying the exemption sought, is clearly unreasonable and unlawful.